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May 2016

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    WHAT IS CHURN RATE?

    Churn rate is the percentage of subscribers to a service that discontinue their subscription to that service in a given time period. In order for a company to expand its clientele, its growth rate (i.e. its number of new customers) must exceed its churn rate. Churn rate is an important consideration in the telephone and cell phone services industry. In many geographical areas, several companies are competing for customers, making it easy for people to transfer from one provider to another.

    With growing pressure from competition and government mandates improving retention rates of profitable customers has become an increasingly urgent to telecom service providers.

    WHY CHURN RATE IS IMPORTANT?

    Churn rates are often used to indicate the strength of a company’s customer service division and its overall growth prospects. Lower churn rates suggest a company is, or will be, in a better or stronger competitive state. Customer loss impacts carriers significantly as they often make a significant investment to acquire customers.

    The ability to predict that a particular customer is at a high risk of churning, while there is still time to do something about it, represents a huge additional potential revenue source for every online business. Besides the direct loss of revenue that results from a customer abandoning the business, the costs of initially acquiring that customer may not have already been covered by the customer’s spending to date. (In other words, acquiring that customer may have actually been a losing investment.) Furthermore, it is always more difficult and expensive to acquire a new customer than it is to retain a current paying customer.

    HOW TO ANALYZE CHURN RATE

    Clearly, churn rate is a critical metric for any subscription business. But there are also a variety of opinions about how to calculate it.

    • CLTV: Understanding customer lifetime value (LTV) is one of the most complex and important analyses a business can take on. Every part of your organization affects the outcome of the calculation: acquisition costs, revenue, customer service, and returns. It’s an accurate approach to customer churn prediction- at the core it has the ability to predict which customers will churn. The approach takes into consideration both micro- segmentation and their behavior pattern. By merging the most exacting micro-segmentation available anywhere with a deep understanding of how customers move from one micro-segment to another over time – including the ability to predict those moves before they occur – an unprecedented degree of accuracy in customer churn prediction is attainable. Figuring out which one will stay for long and will reap how much revenue, helps the service provider to judge whether spending on a customer is worth the effort or not.
    • CVM: Customer value management (CVM) is a holistic way of evaluating individual subscribers in terms of their overall profitability- now and in the future. CVM has the potential to boost earnings. This measure covers subscribers at every stage of their relationship with the operator. Relying on a combination of tactics, including customer payback period, budget rebalancing, tailored customer rewards, and cross- and up-selling campaigns. CVM technique help companies analyze which customers are the most valuable, and why. Indeed, this approach is a key capability in a world where the potential customer base simply isn’t getting any bigger.
    • Predictive Churn Modeling: Predictive technology is a body of tools capable of discovering and analyzing patterns in data so that past behavior can be used to forecast likely future behavior. Predictive technology is increasingly used for forecasting in most of the Telecom companies’ balance sheet. The raw data can be processed to get predictions about consumer behavior for future campaigns.
    • Postpaid and blended churn rates: This churn rate is based upon the losses of both pre-paid and contract customer. Post-paid subscribers are a telecom company’s one of the biggest revenue segments since they have a significant lifetime value for telecom companies. Their discontinuation of services accounts for a major loss in company’s revenue.
    • ARPU: Average Revenue per User or ARPU or average revenue per unit is an expression of the income generated by a typical subscriber or device per unit time in a telecommunications network. ARPU provides an indication of the effectiveness with which revenue-generating potential is exploited. The ARPU can be broken down according to income-producing categories or according to diverse factors such as geographic location, user age, user occupation, user income and the total time per month each user spends on the system.
    • AMPU: The Average Margin per User is calculated on the basis of net profit rather than total income. In recent years, some telecommunications carriers have increased their reliance on AMPU rather than ARPU to maximize their returns as niche markets become saturated. By breaking down customer sales by margin rather than by revenue, companies that have lower sales volumes but create larger margins can be considered more efficient and arguably more profitable than their high-volume competitors.
    • Real- Time Data: Real-time data in customer churn makes the best possible solution today, as it is based on up-to-the-moment information about a subscriber. Achieving real-time data enables the company to immediately adjust it’s offers and solutions in response to the reason of dissatisfaction/ discontinuation of services. Deploying analytics and systems that trigger the moment your subscriber is shifting to your competitor, helps process the retention effective and faster.
    • Binary classification method: This method uses a gain/loss matrix, which incorporates the gain of targeting and retaining the most valuable churners and the cost of incentives to the targeted customers. This approach leads to far more profitable retention campaigns than the traditional churn modeling approaches.
    • General Signs: Customers today are highly conscious of what they need and what is available in the market. The telecom players should always lookout for signs that the customer may be planning to shift. These can easily be picked up from sales support interaction with them- when he bluntly says he is shifting to a competitor, when he is quoting what other players offer, when he is enquiring about MNP or when he is simply calling competitor’s phone line looking for alternatives to his problem.

    Efficient ways for Customer Churn Analysis in Telecom Sector

    SOLUTIONS TO REDUCE CHURN RATE

    Acquiring a customer is far more costly than keeping a customer. So any company that wants to retain its customers should find some value in analyzing and lowering down the churn rate. Even emerging markets, which witnessed high growth in the past, are now looking to consolidate their customer base and differentiate themselves from their peers to reduce churn rates.

    Telecom players use a variety of different metrics to determine when customers are about to churn, or leave. It is profitable for companies to explore the reasons why customers are leaving, and then target at-risk customers with enticing offers.

    • There are a number of different tactics companies use to maintain their customer bases. One of the most important is simply providing efficient customer service. Providing clients with an easy way to get questions answered and issues handled is the key to maintaining cellular clients.
    • Value- added services serve as a subscriber retention tool, especially for established players. While for newer entrants, it will become a part of the marketing strategy to attract customers. If VAS providers leverage the opportunities to tie up with operators, there could be a major increase in the uptake of their services.
    • A commonly used tactic is for a carrier to offer upgrades on the client’s existing account. Expanding on services offered and giving better rates or discounts to the client often improves customer retention rates.
    • Another tactic is offering free access or reduced rates on smartphone applications. The increasing regular use by customers of cellphone applications makes free access to such applications an enticing bonus for many customers.
    • Competing cellular providers aggressively market special deals to churn customers away from their current provider. Common practices include offering free phones and buying out any existing service contract. The cellular service business is highly competitive and will likely remain so; therefore, churn rates will continue to be an important focus for cellular providers.
    • Personalized Tariff plans and service recommendations to each subset of subscribers because a one-size-fit strategy is no longer suitable for telecom sector, every user has a different purpose and usage pattern.
    • By leveraging the user traffic, operators’ strategic and technical teams can make clear and decisive decisions to reduce costs by millions of dollars without jeopardizing quality.
    • Fighting wireless churn with trendy smartphones and fast data network
    • One-on-one Marketing is one of the best tactics to reduce churn rate. Make sure that customers are communicated the new services offering based on their usage analysis and trends and should be given proactive information on the plans which will benefit the customer.
    • Effective communication is one way to reduce churn. Being proactive in addressing difficulties and issues faced by your customers not only helps in building trust and reliability but also ensures a strong working relationship.
    • Cultivate loyalty with attractive smartphone portfolios and strong mobile data networks to support those devices. Loyal customers are less likely to churn because they are more invested in your business relationship and companies have built up a long history of delivering good results and keeping promises.

    BRAND LOYALTY AND CHURN RATE

    The loyalty, and prospective churn, impact of both the tangible and intangible elements of value can be determined through formal qualitative and quantitative customer research. In addition to predictive churn models, these research methods can be used to help anticipate customer turnover. They include evaluating the impact of expressed and unexpressed complaints, and setting up targeted loyalty indices.

    They see the brand as a highly critical company asset, to be enhanced and protected over the long term. Unlike rate plans, coverage areas, contracts, equipment and the like, brand image is one of the intangible elements of value which create, or undermine, true customer loyalty and advocacy. Loyal customers cost less to serve and are most likely to refer other customers.

    Operators are expecting greater customer retention and loyalty due to an improvement in the quality of their services with boom of value- added services. With MNP the customers got the freedom to change their service providers without changing their numbers, thereon, VAS has been viewed by operators as a differentiating factor which can help them grow and sustain in a competitive market.

    Apart from churn management, companies can use the following techniques to improve overall performance:

    • A well-developed customer business strategy
    • An end-to-end management process of customer knowledge/relationship
    • As detailed and in-depth information about customers, and customer profiles, as possible, leading to tight segmentation
    • Frequent updating of customer knowledge and predictive segmentation
    • Flexible marketing actions with customers
    • Ongoing evaluation of action results, i.e. impact on the business

    CONCLUSION

    Churn rate is a growth decelerator. The metric measures the number of subscribers who leave and is often reported quarterly. Obviously, a low churn rate is ideal. Companies that experience a high churn rate are under more pressure to generate revenue from other areas or gain new clients. It’s almost always cheaper and easier to retain customers than it is to go through the process of acquiring new ones. Monitoring churn is the first step in understanding how good you are at retaining customers and identifying what actions might result in a higher retention rate.

    All industries suffer from voluntary churn — the loss of customers to some other company. The survival of any business is based on its ability to retain customers. Churn always happens, eventually. But it’s your efforts in lowering down the impact, will make all the difference in the bigger picture- your position in the leaderboard!

    May 30, 2016 0 comment
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    Owing to a steady proliferation of competing telecom services, customer loyalty has got more reasons than ever to shift quickly from one service provider to other. The operators design the customer acquisition campaigns in order to attract high volume of customers within a short period of time but, it is to be noted that customer loyalty needs more attention from the operators as compared to acquisition. The experts have found that it is much easier to retain existing customers than to win new ones. Acquiring a new customer can cost 6 to 7 times more than retaining a new one and the existing customers are five to ten times more likely to avail a product/service again than people who have never bought it before.

    The new-age telecommunication ecosystem demands an altogether newer approach in order to compete with the other players on the ground and retain their existing customer base preventing customer churn. Thus, reducing dormant customer base and increasing customer loyalty through omni-channel presence and winback effortsis at the top of every telecom operator’s to-do list today.

    The concept of customer churn

    While a service provider stays focused on winning new businesses through customer acquisition, their existing subscribers fade into the background, which is quickly followed by them becoming easy targets to be wooed away by the service offers of the competing service provider.

    It is utmost important to find out ‘why does a customer go dormant?’ as ultimately this leads to customer churn.

    Top 5 reasons for churn of dormant customers:

    1. This may be the same reason why there have been existing a lot of dormant customers – unsatisfactory customer service/experience, no omni-channel presence, low quality of products/service or even inaccessibility.
    2. Lack of benchmarking in terms of service quality as well as costs against competitors.
    3. Lack of attractive offers and rewards to push them for service renewal.
    4. Exhaustive service and support channel for the customers to interact with. Not learning what the customers like and what they don’t like about the service and keeping an issue unresolved ultimately leads to customer churn.
    5. Another reason may be that the customer has developed apathy for your service/brand due to lesser interactions.

    Re-activating dormant customers- INFOGRAPHIC

    Why is targeting of inactive customers important?

    If a service provider has already spent their time and money with a particular customer base and has given it several promotions in order to make the customers feel special and valued, then there are greater chances of them becoming a returning customer as compared to the chances of getting a new customer on board. The reasons being:

    • They already bought product/services from that particular service provider and so their (customer’s) purchase preferences and buying habits are already known.
    • Since, the service provider already has access to their direct contact, they don’t need to do any lead generation.
    • Plus, the promotional offers can be customized based on the past data.

     

    Researchers have found that an average telecom service provider loses between 15 to 30 per cent of its customer base every year and the existing customers have greater chances to renew a subscription again as compared getting new people on board to avail a particular service.It is therefore, justifiable for the operators to focus of re-activating their existing customer base. And thus, prioritizing the targeting of idle customers through omni-channel presence, loyalty management solutions and win back services makes quite a sense to astutely balance customer acquisition and re-activation strategies simultaneously.

     

    Winning back dormant customers

    The identification and re-engagement of dormant customers serves a great purpose for the telcos. The inactive customers are a great source of reactivating lost revenue opportunities. Thus, the service providers are continuing to breach new frontiers of engagement and redefining customer retention with omni-channel presence approach, loyalty management and winback solutions.

    An omni-channel approach in telecom not only opens up new channels for customer service but also it ensures the delivery and management of consistent satisfactory experience and service levels through a set of channels used to enhance the subscriber’s usage journey.

    Alongside, developing loyalty management strategies for all phases of customer engagement is proven to be quite effective in order to prevent customers from being inactive or end a subscription. Allowing the customers to earn reward points based on their purchase value and service consumption patterns is an efficient way to motivate them to spend more and drive a profitable behaviour. In comparison to the standard customer re-activation solutions, the loyalty management solutions use real-time tracking to take proactive actions making positive interventions to prevent activity drop thereby improving revenues. Reaching out to the lapsed telecom customers on the basis of their usage and subscription history helps the mobile service providers to assure higher reach and conversion. Thus, the proactive recovery of dormant customers enables a positive word of mouth improving the reach rate and revenue.

    Another way- the network listener methodology- enables the service provider to tap into network events to identify the best moment to deliver relevant offers. For instance, the dormant telecom subscribers receive an offer instantly the moment they see their mobile device, thus, generating more revenue by improving responsiveness. This not only convinces the subscriber that the operator understands them well but also it creates a push for them to re-engage with the services.

    Some tips to winbacktelecom customer base:

    1. Use customer’s subscription history to drive customer interactions.
    2. Provide omni-channel service as well as customer support.
    3. Identify a control group and isolate customers for inference testing.
    4. Identify the exact period for lapsed interaction based on the service’s purchasing cycle and use inference to plan future engagement strategies.
    5. Make easy and interactive communications and take a lifetime value approach.
    6. Loyalty programs, discounts, promotional offers, winback programs may always help.

    Summary

    There exist multiple evidences to support that rather than using resources for chasing new subscribers it can be quite beneficial for an operator to reactivate existing leads that are about to churn. Customer churn is inversely proportional to the growth of a service provider.  Thus, preventing churn using new-age concepts like loyalty management to interact with the existing customer base may certainly help in increasing the ARPU and overall profitability of a telecom operator exponentially as they are proved to be efficient enough to influence the buying behaviour of dormant customers.

    May 27, 2016 0 comment
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    Telecommunication and its allied industries have undergone terrific changes since past decade or so. The growing mobile users, easily affordable smartphones and internet consumer has gone up ever since.  Many telecom service providers look forward to improve capacity management, which enables better use of the existing resources in addition to plan and speed upgrades; where they are most required to improve service quality and user satisfaction. JIT Capacity Management solution is one such technique that provides advantages as well as tangible benefits that can solve the problem of expanding capacity with its flexibility and strength.

    Invented as a technique to improve production lines in automobiles, Just-in-time (JIT) is an inventory strategy that companies employ to increase efficiency and decrease waste by receiving goods only as they are needed in the production process, thereby reducing inventory costs. While planning and extending the capacity, JIT technique comes to the rescue of telecom service providers because rapid change in customers’ usage network planning has to be agile and careful with the excessive bandwidth investments.
    What is JIT?

    JIT refers to just-in-time with a primary aim of elimination of inventories. It is a way of working and managing to eliminate wastes in a process.It is an inventory strategy employed by telecom operators in order to increase efficiency and decrease supply only as and when required in the process, thereby reducing costs and handling the increased capacity of a volatile demand. However, it requires the producers to forecast demand accurately.

    The impact of JIT on capacity management

    The benefits of JIT for capacity management

    JIT assists the service providers in their efforts to plan as well as manage capacity more precisely. This helps in reducing the overall capex and opex alongside assuring the service quality. The capacity planning of JIT can be used to streamline business and IT processes in the networks of wireline, mobile and cloud data centers in order to reduce the overall time to market as well as time to revenue. It’s flexible, reliable, quick and cost effective when it comes to capacity planning.

    Given the demand growth rate, service providers in telecom industry are now seeking to implement a Just-In-Time Capacity Management Solution. Apart from efficient traffic management it also reduces opex. This means capex can be reduced and/or reallocated to new services elsewhere in the network, thus improving the overall customer experience.

    This means newer approaches to network operational planning and execution is required to reduce time to market new services and additionally protect the service providers’ competitive position.The increasing demand for data services has put on attending costs on the telecom service providers. A solution like JIT in capacity planning can help fix expenditure woes.

    The challenges in JIT Capacity Management

    There’s a gap that remains between the demand for the next generation services and the ability of the network to respond and deliver them efficiently and quickly. For most of the telecom operators, the biggest challenge faced by the service providers in network planning is the management of continuous change in user plans. This requires the network planners to respond to the contingencies like a last minute change in the uptake and usage of new services. Classically, a plan to upgrade speed or any other will need a huge consumer acceptability to justify the expenditure engineering and marketing the upgrade.

    These arise from changes in assumptions of uptake and usage of new services, budget and budget allocations, equipment specifications, vendors selected and technical or operational problems encountered during the rollout process.

    The problems encountered during the delivery process have a major impact, demanding a re-plan of the network build and delivery, which is itself a resource-intensive and time-consuming process. JIT method requires service providers to forecast demand accurately and well in time. A major drawback in this process is that it involves disruptions in the whole chain of telecom service. If there’s a breakdown at one point of transmission and it can pretty much hamper the delivery of the service or worse, could shut-down the chain entirely.

    JIC (just-in-case) capacity management approaches work on the basis of long-horizon and highly conservative forecasts, which the mobile service providers over-engineer the network, adding more capacity to the website but potentially years ahead of demand. Over-engineering of the network results in higher capex outlays, similar to over-leasing from third-party service providers.

    VAS and Capacity Planning

    The value added services segment is rapidly emerging as a potential revenue generator for the telecom services industry and a mitigating plan can detect an opportunity for them to increase average revenue per user among other things. The increasing acceptance and usage of mobile commerce services is also boosting VAS segment.

    The demand for new VAS services is definitely going to surge given that increasing number of younger generation has started using mobile services and are more inclined to adopt the VAS services. Also, when service providers are eyeing rural markets, economical and regional VAS and much more is likely to transform this industry. VAS would be used as a service differentiator and to retain their existing customers and attract new ones. The growing base of future will demand solutions like JIT for planning the capacity and make the most of the assigned bandwidths.

    The road ahead

    In the future, survival of such a fast- paced industry will depend largely on rapid introduction of a constant flow of new services. That’s when the time will be to bring out ‘just-in-time’ techniques that earlier transformed manufacturing and now, network planning.

    Telecommunications will be able to build and use a ‘service-ready network’ that’ll incorporate tools enabling service providers to utilize their resources more efficiently and in turn add new capacity wherever required, simply on a ‘just-in-time’ basis. Even a half-point reduction in the operator’s multi-billion dollar annual spend on infrastructure expansions – possibly through more accurate network planning – would deliver a massive return on investment.

    Conclusion

    Operators and network providers are getting smarter at managing their available capacity. Network capacity has now become a company-wide issue rather than just for engineering department. Marketing departments now measure the impact their campaigns and promotions have on the network. The network is no longer seen as an unconstrained asset. Every promotion is carefully monitored, not only to measure its success, but also to ensure it has not brought any unforeseen demand/congestion onto the network.

    Imagine how dramatically JIT Capacity Planning will cut down capital and operational costs!

    The telecommunication industry is facing an explosion in the types of service offerings and the volume of traffic they will generate. In such a scenario, the new network planning tools like JIT are designed to optimize network, increase agility in order to maximize profitability.

    JIT will become a crucial catalyst in faster rollout of new services in order to fine- tune customer experience at an efficient and accurate rate all the while, reducing their time to market and time to revenue. It will, most importantly, safeguard service providers’ competitive position in the market.

    May 23, 2016 0 comment
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    For quite some time now, the telecom industry has been witnessing the combined forces of convergence and deregulation, modeling the entire landscape of the industry with new trends. Contrary to what we could have anticipated, these trends could not simplify the infrastructure and scenario, and this transformation has resulted in an explosion of the types and numbers of telecom networks, services and applications, operators and service providers. The telecom world of critical heterogeneous elements exerts a demand for the concept of interoperability based on its variations like interoperability of networks and applications among operators. And thus, in order to set a foundation for critical command, control and intelligence of the telecommunication networks, achieving network interoperability has become one of the most challenging and important issues confronting the telecom operators’ community.

    What is Network Interoperability?

    Network Interoperability is the continuous ability to send and receive data among the interconnected networks, providing the quality level expected by the end user without any negative impact to the sending and receiving networks. Specifically, network interoperability refers to the functional interworking of telecom services across multi-vendor, multi-carrier inter-connections working under stressful or even normal conditions, as per the applicable standards and required specifications.

    Why is network interoperability important?

    Network interoperability becomes indispensable in order to achieve end-to-end connectivity. The more diverse networks exist, the greater becomes the need to ensure that they can interoperate in order to make end-to-end communication possible.

    The benefits of interoperability to all elements of the value chain:

    • The user benefits as he can communicate with whom he wants to with a single terminal.
    • The telecom operator benefits as it can select the best equipment available from different manufacturers based on best performance and prices.
    • The product/service manufacturer benefits as it can extend the same equipment set to different operators.

    All you need to know about network interoperability

    What are the challenges associated with the implementation of Network Interoperability?

    There exist a host of reasons why implementing network interoperability successfully is considered difficult. Fundamental to all those problems is the correct balance between the telecom operator’s liabilities and benefits associated with these activities. From the cost perspective, designing the network architecture for interoperability implies the willingness to accept complex set of benefits and associated liabilities. The telecom operators are acutely sensitive to five major liabilities that can be incurred:

    • Increased cost of acquisition associated with the addition of interoperable network/application modes
    • Added cost and complexity of adding features to achieve all network compatibility
    • Increased time for acquiring a new system (time to accept interoperability features and perform proper testing required to certify interoperability)
    • Increased complexity and cost associated with the management of the configuration of interfaces
    • Increased power and decreased speed to accommodate modes providing backward compatibility

    How to achieve interoperability?

    Network interoperability being the ability of two networks to communicate can be achieved in two ways: either by having the two networks confirm to a common protocol standard or by defining a standard interface to which all networks need to adhere, or by providing a gateway that translates between the two protocols.

    Interoperability can be enabled at different stages of development through the following methods:

    1. Before any standard implementation, various barriers to interoperability can be minimized or even avoided. These barriers included proprietary standards and increasingly complex structures due to the convergence of multimedia services, competition among standard bodies, explosion of a number of operators due to deregulation and competition.
    2. The next step includes concentrating on a correct standardization approach. Interoperability can be enabled in a multi-network, multi-service environment. The specifications of the standardization should properly cover the architecture, requirements and protocols.
    3. Testing becomes the last step: conformance and interoperability testing in order to check that the equipment and network confirm to the standards.

    Conclusion

    The core need to evolve to a next-generation interoperable network is the attaining a converged IP infrastructure capable of carrying the voice, video and data service all together through a single connection. Thus, the concept of network interoperability may be anticipated to be the fundamental of evolution from a “one network-one service” approach to a “one network-many services” approach. The concept will gradually shift the telecom network to a next-generation access reducing any bandwidth bottlenecks existing today at the access level.

    May 23, 2016 0 comment
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    It would be a bit of an understatement to say that the evolution of the telecom space is amongst the global economy’s greatest success stories. Let’s look at a few facts to substantiate that statement. The sector continued on an upswing in 2015, with over 7.6 billion mobile connections and operator netting over $1 trillion in revenue. Of course, the best is yet to come, with the global subscriber base expected to reach 5.6 billion by the end of the decade.

     

     

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    May 17, 2016 0 comment
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    Businesses are increasingly turning to cloud based platforms to manage and process the huge quantities of data generated during the course of their day to day interactions with customers, partners, vendors etc. Cloud provides new opportunities to create hyper efficient operations and leverage real time data analytics which help businesses to get the competitive edge in the market. Adoption of cloud has reached stratospheric heights with the next breed of agile and aggressive businesses pushing the boundaries of innovation in order to exceed the customer’s expectations of them and at the same time upending entrenched competition.

    Cloud adoption data and insights

    According to the IDG Cloud Computing Survey, nearly 72% of the enterprises have at least one application or a portion of their computing structure running on the cloud. The enterprise segment will increase their cloud investment more than their counterparts in the SMB segment. Various cost and operational challenges will drive cloud adoption in the future. Top cloud adoption catalysts are: lowering the total cost of ownership (44%), enablement of business continuity (50%), and speed of deployment (46%). The study also points out to the increasing role of the CIO and top IT executives (76%) in purchase decision making. However, the question of security is going to be increasingly critical to any cloud implementation in the future. According to the report, concerns about the security of cloud computing solutions are on the top of every CIOs agenda with 67% considering it to be very critical.

    The State of Security on the Cloud: Stats and Facts

    Despite cloud’s stratospheric rise, lingering doubts remain about data security due to the vast number of security breaches widely reported in the media in the last few years. “Data protection”, “the enabling of security protocols and measures” and “data loss” are some of the factors giving the nightmares to enterprises who are planning on transitioning to the cloud environment. Research on the state of data security conducted by the Ponemon institute arrived at the following conclusions which are given below -:

    • Cyberattacks have increased in frequency and in the cost to remediate the consequences: In 2014 cyberattacks constituted 42% of the data breaches increasing to 47% in 205. The cost has increased from $159 to $170 per record in the same period
    • Increase in business loss due to data breaches: Average loss to business resulting from data breaches increased from $1.33 million to $ 1.57 million for the year 2014 and 2015. The amount of loss was calculated on the basis of customer turnover, increase in customer acquisition activities, reputation loss and loss of goodwill
    • The cost of breach varies from industry to industry: Highest in healthcare ($363) followed by education ($300) transportation ($121) and public sector ($68). The cost of security breach in retail jumped from $105 to $165 within the period 2014 to 2015

    Security guidelines for business transition to cloud?

    Firstly, businesses will have to make the distinction between Public and Private, Hybrid and community clouds platforms because the challenges/concerns for data security are different for different platforms. When you operate in a public cloud, then you operate on shared network and computing infrastructure. Also, the cloud may be owned by a third party provider who may outsource security to outsiders, escalating security risks.

    Then there’s data. Typically data is of three types: Data at rest (Data stores), in transit (networks) and in play (applications). In a public infrastructure everything is at risk. If you use encryption, then management of encryption keys is a big challenge/headache. Ideally, only the owner of the data should have the key. Also, in a shared system, there is no way of knowing who your neighbours are in the public cloud. Also, encrypting data before storing in the cloud would be counterproductive because then you will lose out on the functionality provided by the cloud. In a private cloud, the tenants may all belong to one company which gives better control over the infrastructure, encryption, keys, audits, compliance etc.

    These are questions of significant importance to the industry considering the speed with which businesses are transitioning to the cloud. Several industrial bodies have taken note of the situation and set up standard guidelines for making business transition to cloud smooth and incident free. For example, the government of UK has come up with the Guidance Summary of Cloud Security Principles which provides the guidelines for making the transition.

    The guidelines are as given below

    1. Data in transit protection

    Consumer data transiting networks should be adequately protected against tampering and eavesdropping via a combination of network protection and encryption.

    1. Asset protection and resilience

    Consumer data, and the assets storing or processing it, should be protected against physical tampering, loss, damage or seizure.

    1. Separation between consumers

    Separation should exist between different consumers of the service to prevent one malicious or compromised consumer from affecting the service or data of another.

    1. Governance framework

    The service provider should have a security governance framework that coordinates and directs their overall approach to the management of the service and information within it.

    1. Operational security

    The service provider should have processes and procedures in place to ensure the operational security of the service.

    1. Personnel security

    Service provider staff should be subject to personnel security screening and security education for their role.

    1. Secure development

    Services should be designed and developed to identify and mitigate threats to their security.

    1. Secure consumer management

    Consumers should be provided with the tools required to help them securely manage their service.

    1. Identity and authentication

    Access to all service interfaces (for consumers and providers) should be constrained to authenticated and authorised individuals.

    1. External interface protection

    All external or less trusted interfaces of the service should be identified and have appropriate protections to defend against attacks through them.

    1. Secure service administration

    The methods used by the service provider’s administrators to manage the operational service should be designed to mitigate any risk of exploitation that could undermine the security of the service.

    1. Audit information provision to consumers

    Consumers should be provided with the audit records they need to monitor access to their service and the data held within it.

    1. Secure use of the service by the consumer

    Consumers have certain responsibilities when using a cloud service in order for this use to remain secure, and for their data to be adequately protected.

    May 17, 2016 0 comment
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    Introduction

    The rapid proliferation of smartphones, newer and faster networks, changing patterns of media consumption are tilting the consumers towards the digital medium. In the period 2008 to 2013 the digital share of total media spending rose from 25.1 % to 40.1 % (Mckinsey Report). The report added that the percentage of digital spending in overall media spending will continue to increase and will amount to 50.3 percent by the end of 2018.

    What is driving the shift to digital consumption?

    • This shift towards digital is possible only because of the rapid proliferation of mobile phones.   Half the world’s population has a mobile phone – up from 2 in 10 ten years ago. GSMA forecasts an additional one billion new subscribers by 2020 taking the global penetration up to 60%
    • Increasing mobile broadband connection – forecasted to rise to 70% of the global base by 2020 up from 40% in 2014 (GSMA)
    • Operators enabling networks by increasing their CAPEX spending on improving mobile broadband deployment. CAPEX is forecasted to increase to US $1.4 trillion by 2020, with 3G coverage set to reach 86% of the population(GSMA)

    What are the trends?

    • There is a tilt towards access of digital assets rather than its ownership. Consumers are demanding instant, real time access that too across multiple platforms and devices. Streaming services are becoming popular as 3G/4G networks develop further and smartphones become cheaper with Moore’s law (doubling of chips on microprocessors every two years) coming into effect.
    • Rise of new revenue models are catering to every customer segment: feature rich paid services model accessible across multiple devices and platforms; free advertisement supported services; freemium – free basic services and opt-in for feature rich services.
    • Increase in consumption of digital content on mobile platforms especially with mobile based apps.

      

    Challenges in the digital ecosystem

    But it is far from a perfect system. Challenges do exist. There is the question of artist monetization. Advertising supported streaming services are especially harsh on the artist as many of them are left out of the lurch. Also, mobile penetration may be near pervasive in many developed countries but it is still to catch fire in many of the poorer countries (Half of the world’s population has mobile connection GSMA). But the biggest problem is the one of PIRACY. According to ComScore/Nielsen data, 20 percent of the world’s fixed internet users regularly use unlicensed services. If one factors in mobile devices into this equation the percentage would definitely be higher.

    Why has it arisen?

    Outdated copyright laws (unfit for the digital age), obscurity provided by the internet and the growing demand for new releases are spurring copyright violations worldwide.

    • Outdated copyright laws: A good example of the old and archaic copyright laws unfit for the digital age is the Digital Millennium Copyright Act, 1996 which says that online platforms are not responsible for posted content – but they do have to take the content down once it is requested by the content owner. This may be useful for taking down websites that support downloaded content but hardly relevant for apps that support live streaming – like Periscope.
    • Obscurity provided by the internet: Unlike earlier, when the entire SWAT team would swoop down on torrent owners literally smoking them to oblivion, today’s online pirates are more difficult to track because of the anonymity provided by the internet. Closing these websites is like cutting down a hydra headed monster – cut one down, another will grow quickly in its place
    • Unlike the perception that people use pirated stuff because it costs nothing, the truth is very different. People go to websites that provide pirated content because it is available earlier than the local release date.

    How are these sites making money?

    Advertisers pay for impressions per mile (CPM) also called click per mile (1000). The way it works is that the links are submitted to a hosting site (who have some kind of an affiliate program with the advertiser) and money is paid at the rate of $2 – $5 for every 1000 clicks. The advertisement are of three types: pre-roll (advertisement played out at the beginning), mid roll and post roll.

    What are the risks?

    The risks are many – and almost everybody is affected: artists, the user downloading or streaming the content and even the advertiser. The artist loses out on royalties. The user compromises security by downloading malware masquerading as a security patches or video plugins.. Advertisers lose out on reputation by associating their brand with an illegal streaming website.

    Why isn’t anybody stopping them?

    The dynamic nature of the internet makes it very difficult for law enforcement agencies to crackdown on websites peddling pirated content. That said, the war on piracy is being waged on two fronts –

    Lawsuits: Too expensive and website can change domains easily (owner cannot be tracked down as many times they are operating from a different country with indifferent copyright laws)

    Legal recourse: SOPA, PIPA, Indian Copyright Act 1957, Website blocking by the Court of Justice, European Union (March 2014) – ruling that copyright is a fundamental right requiring protection. However, these laws were not built keeping in mind the digital age…benefits are short term, with website mushrooming elsewhere

    What can be done?

    • Google acting tough on websites receiving several takedown orders
    • Legal recourse against advertisers wilfully advertising on such websites as well as a crackdown on payment processors on these websites

    The third option – creating alternative legitimate offers: Content platforms that bring together artists, producers, content producers, app providers, with integrated content discovery and loyalty payments.

    May 5, 2016 0 comment
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